Summary

HIGHLIGHTS

Our audit of the State Superintendent of Public Instruction’s (state superintendent) oversight of the Inglewood Unified School District (district) revealed the following:

The district has yet to demonstrate significant improvements to its finances.

Expenditures have consistently exceeded revenue even after the state superintendent assumed control in September 2012.

Declining enrollment within the district remains a significant long‑term financial problem.

The district’s operations have shown limited progress toward meeting the state superintendent’s expectations for recovery.

The Fiscal Crisis and Management Assistance Team’s (FCMAT) annual assessment has consistently concluded that the district has yet to fully implement and comply with various state standards.

The district lacks a clearly stated and publicly available action plan that prioritizes FCMAT’s findings and nearly 700 recommendations.

The departure of the district’s second and longest serving state administrator may further delay the district’s progress toward improvement.

The state superintendent should have analyzed the county office of education’s fiscal oversight of the district before the State’s takeover as required by state law.

Results in Brief

The Inglewood Unified School District (district) began the process of placing itself under state control when its five‑member school board (governing board) requested emergency funding from the State in July 2012. Citing the possibility that it would be fiscally insolvent by January 2013, the district’s governing board adopted a resolution requesting financial assistance, and in September 2012, the governor signed Senate Bill 533 (SB 533) (Chapter 325, Statutes of 2012) that authorized up to $55 million in emergency funding. This action also required the State Superintendent of Public Instruction (state superintendent) to assume control of the district—through his appointed state administrator—until such time that both he and his state administrator conclude that the district can sustain the improvements made in its finances and operations to warrant its return to local control.1 Since assuming control just over three years ago, the state superintendent has appointed three individuals to serve as state administrator, not including an interim administrator, and the district has yet to demonstrate significant improvements to its finances or operations. Although various recovery plans exist, there is no clearly stated and publicly available action plan prioritizing where the district needs to improve and how such improvement will be achieved. Without such publicly available information, the public can grow frustrated with a state‑administered approach to recovery.

There is limited evidence to indicate whether the district’s finances have improved while under state control, and declining enrollment within the district remains a significant long‑term financial problem. Despite projecting a balanced budget for fiscal year 2015–16, the district has demonstrated a sustained history of deficit spending, where its expenditures exceeded revenue. Such deficit spending at the district increased under the state superintendent’s control, which was a cumulative $18.6 million between fiscal years 2012–13 and 2014–15. In contrast, deficit spending was $14.9 million over the four‑year period ending in fiscal year 2011–12, which was prior to the State’s takeover of the district. Although we saw evidence that the second and longest serving state administrator attempted to curtail spending, such as by reducing the number of district employees, these efforts have yet to translate into lower overall spending from the district’s general fund. Further, the district is still forecasting declining enrollment, which can negatively affect district revenues, which are based on the average daily attendance of its enrolled students. For example, the district projects that average daily attendance for fiscal year 2017–18 will decline by 1,000, or 10.5 percent less than the current fiscal year.

Along with the district’s unsettled fiscal condition, the district’s operations have shown limited progress toward meeting the state superintendent’s expectations for recovery. Such progress is measured annually by the Fiscal Crisis Management Assistance Team (FCMAT), an organization established in state law to provide school districts and other educational entities with fiscal and managerial oversight and assistance. FCMAT provides the district with scores indicating the degree to which specific state and industry standards have been implemented. The state superintendent generally requires a score of 6 for each evaluated standard, which is a score that means only portions of a given standard have been implemented and full, sustainable implementation is not yet complete. At the end of FCMAT’s latest review in July 2015, the district continued to receive scores that ranged between 1 and 4, indicating that substantial progress is still needed before meeting the state superintendent’s expectations.

Although other districts have taken eight years to exit state control, the lack of a clearly articulated action plan to address the low FCMAT scores, and thus ultimately satisfy the state superintendent’s expectations, is troubling and may cause some in the community to question whether there is a specific plan to improve the district after three years under the state superintendent’s direction. The state superintendent has ultimate authority over the district and decides when sufficient improvements have been made. However, the state superintendent and his staff did not require his second and longest serving state administrator to develop an action plan—as required in his appointment agreement—to respond to FCMAT’s numerous findings and recommendations. The second state administrator indicated that he and his staff were more focused on instituting new procedures and other tasks while the California Department of Education’s (Education) director of the School Fiscal Services Division—the state superintendent’s representative—indicated that he was fully aware of FCMAT’s findings and was in communication with the district about the report. Regardless, without publicly available information on what steps are being taken, those living in the district and other stakeholders can grow frustrated with continually low FCMAT scores that remain far from the state superintendent’s expectations.

The state superintendent has great discretion on who he appoints as a state administrator. Our review noted that the state superintendent appointed qualified individuals to lead the district and took steps to advertise the state administrator position, attracting numerous candidates having prior experience as a superintendent at other school districts. However, our ability to fully evaluate the appointment process was limited since the California Education Code (education code) does not require the state superintendent to document the basis for his appointment decisions. Although we could review examples of notes from interviews with various candidates at different points in time, these documents did not allow us to understand why those selected to serve as state administrator were deemed the best suited or most qualified to improve the district’s financial and academic performance.

The education code and SB 533 require the state superintendent to consult with the Los Angeles County Superintendent of Schools (county superintendent) on the appointment of a state administrator. According to the county superintendent, the state superintendent called him regarding all three state administrator appointments. The county superintendent told us that he expressed some reservations about the appointment of the first state administrator, and that he did not know the two individuals who ultimately became the district’s second and third administrators. Although the state superintendent spoke with the county superintendent about the three state administrators he appointed, it is unclear whether his efforts fully satisfied the Legislature’s intent, because neither the education code nor SB 533 defines what the county superintendent’s consultative role should entail.

We also found it difficult to evaluate the state superintendent’s oversight and guidance of his second and longest serving state administrator (who served for 26 months). For example, to our knowledge, the state superintendent did not require the second state administrator to develop annual performance objectives and he did not evaluate the second state administrator’s performance. However, both were requirements outlined in the appointment agreement. Ultimately, the state superintendent can terminate the appointment of his state administrator without stating a reason, and he did so in September 2015.

Finally, our review found that the second state administrator and his staff made some notable efforts to improve the district. For example, the district’s former chief business official implemented a position control system, which allows the district to better budget, track, and monitor the number of full‑time equivalent positions in the district. The district also has increased its efforts to dock the pay of employees who have taken leave without having the necessary balances. Finally, the Los Angeles County Office of Education has developed greater confidence in the district’s financial reporting since it approved the district’s last three budgets. However, with the appointment of a new state administrator in October 2015, the district will have new leadership that will need to continue to improve upon the district’s prior efforts.

Recommendations

Legislature

To ensure a transparent and accountable process, any future state emergency funding for a school district appropriated by the Legislature should specifically require the state superintendent to document the selection and appointment process of a state administrator, including the rationales for progressing certain candidates once screened or reasons that particular individuals were ultimately selected to serve as state administrator. Additionally, it should define the county superintendent’s role in the appointment process for a state administrator.

Education

To assist the district with establishing priorities and to ensure that the public is aware of those priorities, the state superintendent should direct his state administrator to develop an action plan to address FCMAT’s findings and recommendations. Such an action plan should describe for the public why certain findings were prioritized and what steps the state administrator plans to take to improve the district’s FCMAT scores.

To provide the public an opportunity to fully understand the requirements for and the progress made toward restoring local control to the district’s governing board, the state superintendent should direct his state administrator to do the following:

Establish a web page on the district’s website listing the specific exit criteria, indicating which criteria have been satisfied, and what the state administrator’s and state superintendent’s expectations and plans are for satisfying remaining exit requirements. One way the state superintendent could do this would be to provide regularly updated information in a format that is similar to the information we present in the Appendix of this audit report.

Agency Comments

Education indicated it would work with the district’s current state administrator to implement our report’s recommendations.

Footnotes

1 Since the State took control of the district, the state superintendent has appointed two administrators, one interim administrator and one trustee. All had the same powers, and for the purposes of our report, we refer to the state superintendent’s appointee to lead the district as the state administrator. Go back to text